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Why Management is Important for Business

Paper Type: Free Essay Subject: Business
Wordcount: 4248 words Published: 28th Jul 2021

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Traditionally, the term “management” refers to the activities (and often the group of people) involved in the four general functions: planning, organizing, leading and coordinating of resources. Note that the four functions recur throughout the organization and are highly integrated. Emerging trends in management include assertions that leading is different than managing and that the nature of how the four functions is carried out must change to accommodate a “new paradigm” in management. This topic in the helps the reader to accomplish a broad understanding of management and the areas of knowledge and skills required to carry out the major functions of management.


According to (Management Innovations, 2008) “management is the process of reaching organizational goals by working with and through people and other organizational resources”. 

Management has the following 3 characteristics:

  1. It is a process or series of continuing and related activities.
  2. It involves and concentrates on reaching organizational goals.
  3. It reaches these goals by working with and through people and other organizational resources.

In addition, Management brings together all Six Ms i.e. Men and Women, Money, Machines, Materials, Methods and Markets. They use these resources for achieving the objectives of the organization such as high sales, maximum profits, business expansion, etc.


All of us have seen, heard, worked under or been part of a management one time or other. But have you ever wondered what makes management such an integral part of any activity? The roots of the word ‘management’ can be traced back to the Latin word ‘manu agree’, which means ‘to lead by hand’. This shows that an effective management is one which actually guides the employee onto a path of efficient and productive work, while leading by example. Thus we can safely conclude that a good manager will not ask employees to do something that he/she may not do himself/herself. In true sense, effective management involves directing and organizing people or resources under one’s influence, to ensure better co-ordination, productivity and best possible positive output in any field. Whether it is a singular person managing at a small scale or multiple persons involved in large scale operations, the overall impact of good management is always the same, that of exponential profit.

Let’s look at some key points which make management important to any process.

  • Achieving Company Targets
  • Help your front line deal with price objections.
  • Increase your average order value.
  • Know your customers.
  • Be business intelligent.
  • Focus on your existing customers.
  • Re-generate the accounts that have stopped trading with you.
  • Target profitable new business

When a company begins its operations, specific goals are setup which can only be achieved if all the parts of the organization function together and efficiently. Proper management makes sure that each part of the company works towards achieving a common goal without disarray. Management actually plans, executes and balances the resources of a company in such a way that there is maximum work output to attain the goals of organization swiftly, while retaining work quality. In absence of proper management, different sections go on to attain individual targets. However, common goal may not be achieved, which would further lead to delays, losses and low quality output.

Reduction In Wastage

When resources of a company are effectively managed, wastage is reduced, thereby lowering overall costs and attaining the state of ‘resource optimization’. This means that company is making profits not only from output, but also from better and optimum use of input. Proper utilization of resources and reduced wastage prevents both under employment and exploitation of resources. Management can identify resources which are scarce and find alternatives for the same, thus reducing the cost again.

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Simplifies The Organizational Structure

Management controls effective work division, specialization and resource allocation. This creates a uniform flow of work and specifies boundaries of responsibilities, authority and rights, which do not overlap. This structure is necessary, as it clarifies to each employee his position and field of influence in the organization. In such a scenario, every employee would know his/her basic rights, duties, immediate superiors and subordinates, along with the knowledge of opportunities awaiting him, as his relation with the company grows.

Increases Stability

The company should be maintained in such a fashion that external market turbulences do not hamper the company’s functioning. This requires effective changes that need to be made in the company, without hurting the company’s stand or its workers too much. Without proper management this will not be possible. Management will provide increased stability and adaptability to the company, helping it survive market conditions and grow with time. Also, the workers would not be apprehensive about losing their job, which would, in turn, help them work with peace of mind.

Provides The “Feel Good Factor” 

It is extremely important to keep the workers happy for the successful functioning of the company. A company which is managed with efficacy prospers rapidly and, in turn, produces better revenue, thereby opening avenues of growth for the workers involved. The upward climb in the growth chart assures the workforce of not just better salaries, but better positions, which provides motivation for better work.  

Profits Galore

This is a cumulative effect of all of the benefits mentioned above. Proper management helps to build efficient organizational structure, set targets that are testing yet achievable and optimize resource utilization. Such a scenario increases profits by maximizing productivity and reducing costs. Happy and de-stressed workers work with more zeal and enthusiasm. This increases quality and quantity of output, which aids in the growth of the company, beating competition and emerging out victorious!


The basic purpose of management in an organization is to clearly tell those persons who work for the organization what they have to do and when and to ensure that they can and do it.

It therefore needs management to look after staff in all kinds of functions serving the organization such as business strategy, contracting, accounting, investment, law, research, methodology, recruitment, safety, administration, public relations, shareholder relations and so on as well as the fundamental functions of selling the company’s products or services and delivering these according to agreed contract terms.

Nature of management can be described as follows.

Continuous Process:

Management is a never ending process. It will remain the part of organization till the organization itself exists. Management is an unending process as past decisions always carry their impact for the future course of action.

Universal in Nature:

Management is universal in nature i.e. it exists everywhere in universe wherever there is a human activity. The basic principles of management can be applied anywhere whether they are business or non-business organization.

Example: planning, organizing, staffing, directing and controlling effectively and achieve the desired result.


Management is basically multidisciplinary. Though management has developed as a separate discipline it draws knowledge and concepts of various other streams like sociology, psychology, economics, statistics etc. Management links ideas and concepts of all these disciplines and uses them for good-self of the organization.

Management is a group activity:

Management is a vital part of group activity. As no individual can satisfy all his needs himself, he unites with his co-workers and work together as an organized group to achieve what he cannot achieve individually.

Management is goal oriented:

Management is a goal oriented activity. It works to achieve some predetermined objectives or goals which may be economic or social.


Management is dynamic in nature i.e. techniques to manage business changes itself over a period of time.

System of authority:

Authority is power to get the work done by others and compel them to work systematically. Management cannot perform in absence of authority. Authority and responsibility depends upon position of manager in organization.

Management is an art:

Management is considered as art as both requires skills, knowledge, experience and creativity for achievement of desired results.

Management is Science:

Management is considered as science. Science tells about the causes and effects of applications and is based on some specific principles and procedures. Management also uses some principles and specific methods. These are formed by continuous observations.


The 4 basic management functions that make up the management process are described in the following sections:



Planning involves choosing tasks that must be performed to attain organizational goals, outlining how the tasks must be performed, and indicating when they should be performed.

Planning activity focuses on attaining goals. Managers outline exactly what organizations should do to be successful. Planning is concerned with the success of the organization in the short term as well as in the long term (Rothbauer-Wanish, 2009).

For example, a manager of a new local restaurant will need to have a marketing plan, a hiring plan and a sales plan.


Organizing can be thought of as assigning the tasks developed in the planning stages, to various individuals or groups within the organization. Organizing is to create a mechanism to put plans into action.

People within the organization are given work assignments that contribute to the company’s goals. Tasks are organized so that the output of each individual contributes to the success of departments, which, in turn, contributes to the success of divisions, which ultimately contributes to the success of the organization.


Influencing is also referred to as motivating, leading or directing. Influencing can be defined as guiding the activities of organization members in the direction that helps the organization move towards the fulfillment of the goals.

The purpose of influencing is to increase productivity. Human-oriented work situations usually generate higher levels of production over the long term than do task oriented work situations because people find the latter type distasteful.


  • It includes verifying the actual execution against the plans to ensure that execution is being done in accordance with the plans.
  • It measures actual performance against the plans.
  • It sets standards or norms of performance.
  • It measures the effective and efficiency of execution against these standards and the plans.
  • It periodically reviews, evaluates and monitors the performance.

If the gaps are found between execution levels and the plans, controlling function involves suitable corrective actions to expedite the execution to match up with the plans or in certain circumstances deciding to make modifications in the plans.

For example, if the company has a goal of increasing sales by 5% over the next two months, the manager may check the progress toward the goal at the end of month one. An effective manager will share this information with his or her employees. This builds trust and a feeling of involvement for the employees.


Planning is the first and most important function of the management. It is needed at every level of the management. In the absence of planning all the business activities of the organization will become meaningless. The importance of planning has increased all the more in view of the increasing size of organizations. In the absence of planning, it may not be impossible but certainly difficult to guess the uncertain events of future.

When we look at planning in the context of management process, it is called activity; it is being a part of management. But on the other hand, when it is studied separately it is called a process because to complete one has to clear many steps one after the other. So far as the number of steps included in the planning process is concerned it depends on the size of the organization. Different organization can have different planning process. The following steps are generally taken in the business organization during the planning process (Management, 2010).

Setting the objectives;

Objectives are those end points for whose attainment all the activities are taken. In the planning process objectives are determined and defined first of all so that all the employees concerned can be informed about them to get their complete cooperation. Objectives have a hierarchy of their own organizational objectives, departmental objectives, and individual objectives.

Developing the premises: the basis of planning is those factors which influence the possible results of different alternatives. Before taking a final decision about any alternative a forecast of this assumption is made. The rate of success of planning will be in direct proportion to the rate of the success of forecasting. The assumption of planning is two types:

  1. Internal premises: capital, labor, raw material, machinery etc.
  2. External premises; Government policies, business competition, taste of customer rate of taxes. etc.

Identifying alternative course of action: Generally, there is no work which has no alternative method of doing it. On the basis of the objectives of the organization and limitations of planning, alternative course of doing a particular work can be discovered.

Evaluating alternative courses: All those alternative courses which are up to the expectations of the minimum preminary criteria are selected for intensive study. It will be seen as to what extent a particular alternative course can help in the attainment of the objectives of the organizations. There is however, one problem which confronts us while analyzing these alternative courses. Every alternatives course has its merits and demerits.

Selecting an alternative: alternative a careful analysis of different alternatives the best one is selected. Sometimes the analysis yields more than one alternative course with similar merits.

Implementing the plan: After having decided the chef plan and the subsidiary plans, they are to be implemented. After implementing the plans the sequence of different activities has to be decided. In other words, it is decided as to who will do a particular job and at what time.

Follow up Action: the process of planning does not end with the implementation of plans. Plans are formulated for future which is uncertain. It is of great importance that there is a constant review of plans so as to ensure success in the uncertain future. The moment there appears to be changes in the plans also. In this way we can say planning is continuously moving process.

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The difference between leader and manager can be summarized this way: “When you are a leader, you work from the heart. As a manager, you work from the head.” Although it is probably more complex than that, the point to remember is the difference between what you do as a leader and what you do as a manager-and the constant need to be able to do both. Furthermore, the head and heart need to be partners, not independent operators.

A manager focuses attention on efficiency, effectiveness, and making sure the right things happen at the right time. For instance: You are in a manager role when you set performance objectives with staff, prepare budgets, review cash flow projections, develop action plans, and evaluate programs or fund raising strategies or any other aspect of the company. Managing may also include doing hundreds of other tasks that require focused and logical attention to the good health of the organization.

On the other hand, a leader is a strategist, a visionary, and some-one who inspire others to greatness. For example, you are leading when you share your vision for your organization, or when you bring staff and people together to design a program or develop a strategy or resolve a problem. Leaders motivate staff and people, serve as role models, inspire people to cooperate, build community and capacity inside and outside the organization, and create learning environments in which people can grow and develop themselves without fear.

Leaders follow their own intuition which may in turn be more benefit to the company. Their Followers are often more loyal to them. Managers do things by the book and follow company policy. Their Subordinates may or may not be loyal to them. A Leader in practical terms motivates others to do the task. A Manager in business terms ensures tasks are done through others (Jones, 2013).

Some people think of the words Manager and Leader and think they are the same. The two are related, but the jobs are different. They might look the same, but don’t mean the same. Both Manager and Leader have different responsibilities in an organization. Leader will influence and set example for others to follow, this is called “do as I do, and Manager is do what I say”. In real life, some Managers possess leadership qualities and some Leaders possess some managerial qualities. Managers and Leaders are two different kinds of characters. It’s not easy to see the difference because the qualities of Managers and Leaders are each combined in the same person (sundayma, 2012).

But if ones observe the qualities in each person, one will know that Leaders and Managers are different because Manage tends to manage the work and rules, and Leaders deal with personal issues of people, and also know that a Leader does not have subordinates, a leader has followers. Sometimes societies and organizations need either a manager or a leader, or sometimes they need both managers and leaders. Their motivations, personal history, their way of thinking and attitude are different.

In short we can say the mian differences between a manager and a leader are:

– The manager administers; the leader innovates.

– The manager is a copy; the leader is an original.

– The manager maintains; the leader develops.

– The manager focuses on systems and structure; the leader focuses on people.

– The manager relies on control; the leader inspires trust.

– The manager has a short-range view; the leader has a long-range perspective.

– The manager asks how and when; the leader asks what and why.

– The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.

– The manager imitates; the leader originates.

– The manager accepts the status quo; the leader challenges it.

– The manager is the classic good soldier; the leader is his or her own person.

– The manager does things right; the leader does the right thing.


Herzberg classified these job factors into two categories-

Hygiene factors- Hygiene factors are those job factors which are essential for existence of motivation at workplace. These do not lead to positive satisfaction for long-term. But if these factors are absent / if these factors are non-existent at workplace, then they lead to dissatisfaction. In other words, hygiene factors are those factors which when adequate/reasonable in a job, pacify the employees and do not make them dissatisfied. Hygiene factors include:

  • Pay – The pay or salary structure should be appropriate and reasonable. It must be equal and competitive to those in the same industry in the same domain.
  • Company Policies and administrative policies – The company policies should not be too rigid. They should be fair and clear. It should include flexible working hours, dress code, breaks, vacation, etc.
  • Fringe benefits – The employees should be offered health care plans (mediclaim), benefits for the family members, employee help programs, etc.
  • Physical Working conditions – The working conditions should be safe, clean and hygienic. The work equipment’s should be updated and well-maintained.
  • Status – The employees’ status within the organization should be familiar and retained.
  • Interpersonal relations – The relationship of the employees with his peers, superiors and subordinates should be appropriate and acceptable. There should be no conflict or humiliation element present.
  • Job Security – The organization must provide job security to the employees.

According to Herzberg, the hygiene factors cannot be regarded as motivators. The motivational factors yield positive satisfaction. These factors are inherent to work. These factors motivate the employees for a superior performance. These factors are called satisfiers. These are factors involved in performing the job. Employees find these factors intrinsically rewarding. The motivators symbolized the psychological needs that were perceived as an additional benefit (Herzberg’s Two-Factor Theory of Motivation, 2012).

Motivational factors include:

  • Recognition – The employees should be praised and recognized for their accomplishments by the managers.
  • Sense of achievement – The employees must have a sense of achievement. This depends on the job. There must be a fruit of some sort in the job.
  • Growth and promotional opportunities – There must be growth and advancement opportunities in an organization to motivate the employees to perform well.
  • Responsibility – The employees must hold themselves responsible for the work. The managers should give them ownership of the work. They should minimize control but retain accountability.
  • Meaningfulness of the work – The work itself should be meaningful, interesting and challenging for the employee to perform and to get motivated.

In short, Herzberg theorized that employees must be motivated to experience job satisfaction but that unacceptable working conditions can only result in a lack of satisfaction. The data analyzed for the study reported here indicate Extension agents left the organization for both reasons: lack of job satisfaction and job dissatisfaction (Herzberg, 1968). The presence of sufficient maintenance factors prevents employment discontent, whereas adequate motivators may direct occupational contentment (Mausner, & Snyderman, 1959).

When salary occurred as factor in the lows (causes of dissatisfaction) it revolved around the unfairness of the wage system within the organization… It was the system of salary administration that was being described… it also concerned an advancement that was not accompanied by a salary increase. In contrast to this, salary was mentioned in the high stories (events causing satisfaction) as something that Herzberg’s Theory of Motivation went along with a person’s achievement on the job. It was a form of recognition; job satisfaction meant more than money; it meant a job well done; it meant that the individual was progressing in his work (Herzberg, 1968)


Management is the integration and co-ordination of resources in order to move effectively towards desired objectives. All organizations have some missions that include their reasons for existence. To be effective, organizations must have targets, objectives towards which managers hope to move. Managers influence all the phases of modern organizations. Sales Managers maintain a sales force that markets goods. Personnel managers provide organizations with a competent and productive workforce. Plant managers run manufacturing operations that produce the clothes we wear, the food we eat, and the automobiles we drive.

In short, all societies, whether developed or developing, need good managers.


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